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Is America Loosing...The battle for Economic Survival?

Beset by crime, campus riots, strikes, inflation, recession, and the agony
of nine years of Vietnam, most Americans are utterly unaware of a global battle
now under way which they could be losing by default.


Within and without, the awesome American economy is facing serious challenges.

Internally, the "inflationary recession" continues — although leading economists assure us that the recession is still relatively mild and will not develop into a major downturn. Measures to combat inflation, they say, are finally beginning to take hold.

Externally, foreign bankers and economists are expressing doubts about America's economic future. Continued inflation and balance-of-payments deficits, year after year, are eroding confidence in the power of the dollar as the pivotal international currency.

To some worried West Europeans, the major U.S. "export" today is inflation — and an inflationary psychology.

Where is the United States going — or drifting? Americans don't know. Foreigners don't know. Said one European delegate to a recent Organization for Economic Cooperation and Development meeting:

"Frankly, we don't know where the U.S. is heading. . . . They [governmental leaders] haven't done what had to be done when it had to be done, and the situation has been dragging for a long time."


And Now — Trade War

On top of all this is the growing threat of worldwide trade war.

In fact, the first warning shots of a vast, three-cornered trade battle have already been fired. The trouble is, few have heard the volley of shots.

Charges and countercharges of protectionism, discrimination and bad faith are hurtling back and forth across both the Atlantic and the Pacific.

The United States is growing increasingly impatient with Japanese restrictions on U.S. investments, and Common Market barriers to profitable U.S. farm exports. In turn, officials in Tokyo and Brussels (Common Market headquarters) warn of severe reprisals if Washington attempts, through new laws, to curb the rising tide of imports into the United States.

Since early 1955, The PLAIN TRUTH has repeatedly warned of the specter of worldwide trade war. Backed up with facts and predictions from leading news sources, we have showed time and again what was bound to happen to the United States and Great Britain if our largely apathetic peoples didn't face up to the growing challenge of economic survival.

Now, lamentably, those predictions are coming to pass.

The United States is slowly but surely pricing itself out of one international market after another. Inflation — clipping along now at a 6.2% annual rate — has robbed the country of its traditional export-over-import surplus. Wage settlements, far out of line with production increases, add to the growing crisis of U.S. trade.

Abroad, former enemies, now chief trade partners — Japan and Germany — continue their rapid industrial and economic growth. At the same time, they and other major trading nations are alarmed by the continual lack of economic discipline in the U.S. They are losing confidence in the ability of the world's leading banker nation to manage its own affairs.


"Grand Design" Finished?

Largely because of America's economic difficulties, the whole fabric of international trade and economic cooperation, so carefully and painstakingly worked out in Washington and other leading world capitals, is threatened with dissolution.

Ever since the conclusion of the Kennedy Round tariff talks in 1967, for example, it has been fairly clear that American public opinion is turning increasingly sour toward one chief trade ally — the European Common Market. But it was not always this way.

On July 4, 1962, President John F. Kennedy said:

"We do not regard a strong and united Europe as a rival but a partner . . . capable of playing a greater role in the common defense, of responding more generously to the needs of poorer nations, of joining with the United

States and others in lowering trade barriers, resolving problems of commerce and commodities and currency, and developing coordinated policies in all economic and diplomatic areas. . . . The United States will be ready for a declaration of interdependence. . . . We will be prepared to discuss with a united Europe the ways and means of forming a concrete Atlantic partnership."

That was eight years ago.

Now, according to one trade expert, "The bloom is off the rose." The talk in official circles in the U.S. is more of trade war than partnership.

Senator Jacob K. Javits (N.Y), long a leading exponent of free trade and a champion of close U.S. cooperation with Europe, expressed the new mood of pessimism succinctly in a recent speech: "I regret that the European Common Market is increasingly taking

on the appearance of a narrow, inward-looking protectionist bloc, whose trade policies . . . increasingly discriminate against non-members."

And Edwin L. Dale, Jr., the respected international economic analyst of The New York Times and once an ardent proponent of the Common Market, wrote recently in The Times of London:

"We bought a pig in a poke. We have been taken. . . . The girl looked gorgeous for awhile. But now she is all warts. It is all very human, but the time has come to cut our losses."

This is the increasingly bitter U.S. viewpoint. Europeans, on the other hand, are crying that the U.S., via its annual balance-of-payments deficit, is exporting inflation to Europe. And with these inflated dollars, they point out, American businesses have been buying up huge segments of Western European industry. The massive "Eurodollar" market — surplus dollars in circulation in Europe — now totals approximately $43,000,000,000.


Agriculture the Big Obstacle

Overall, the United States profited economically from the formation of the Common Market in its first decade. This fact cannot be denied. U.S. exports to the Six rose by 153 percent compared to an 84 percent increase to non-Community countries.

Agriculture, however, is the big obstacle. Over the last three years the U.S. has watched its position of key agricultural supplier to the Six gradually erode away. The drop in U.S. farm exports to the EEC in 1969 was 21 percent over the previous year.

At the same time, rising subsidies to Common Market farmers have produced a glut of many commodities within Europe. Brussels officials, for example, are pondering over what to do with a steadily growing "butterberg" — a mountainous oversupply of butter.

Some of these surpluses, according to U.S. officials, are being "dumped" into traditional American export markets below U.S. export price levels. J. Robert Shaetzel, American ambassador to the Common Market, cites, as examples, sales of wheat to Taiwan, lard to Britain, and feed grains to Japan.

Shaetzel recently addressed an audience in Bonn, West Germany. He said that original American hopes for cooperation with the Common Market have "largely evaporated and been replaced by irritation, frustration, and a brooding sense of apprehension as to what the future will hold."

West German Chancellor Willy Brandt has even gone so far as to propose a new American-European liaison office to discuss mounting trade problems between U.S. and the Common Market.

Thus the "grand design" of a politically unified Western Europe and the United States waltzing harmoniously in an "Atlantic partnership" delirium is virtually dead.


Co-Prosperity Sphere — Act II

Washington's hopes in the early 1950's for a revitalized Japan, able to share the burden of leadership in the Pacific region, has worked out well — all too well.

Given massive transfusions of economic assistance after the war (a sort of "Asian Marshall Plan"), protected by the U.S. nuclear umbrella (saving billions of dollars in defense), Japan has become an economic giant of the first magnitude. In staging the first world's fair in Asian history, Japan this year is showing the world just how far up the economic ladder she has risen.

Japan has become an economic giant — far surpassing the dreams of the military "Greater East Asia Co-Prosperity Sphere" planners of the 1930's.

Japanese industry, in octopus-like fashion, reaches around the earth. It devours voluminous supplies of raw materials. The ubiquitous "Made In Japan" label — no longer an epithet for cheapness — is affixed to every product under the Rising Sun.

Japan has climbed to third place among industrial powers, outranked by only the United States and the closed industrial society of the Soviet Union. Japan's annual gross national product stands at between one fourth and one fifth that of the U. S. — $200,000,000,000, compared to $952,000,000,000. But Japan's yearly rate of growth has averaged three times that of the U.S. over the last decade.

And very important — despite Japan's phenomenal rate of growth, her economy is the most disciplined and controlled of all major nations. There is no runaway inflation in Japan!

By 1975, Japan's GNP could reach as high as $440,000,000,000. That awesome figure would be greater than today's combined gross incomes of Britain, West Germany and France.


Competition Deluxe

Japan's unstoppable growth has meant competition deluxe for the inflation-ridden United States.

For years the U.S. held the advantage on the massive trade between the two nations. This is no longer the case. In 1969, the U.S. trade deficit with Japan reached approximately $1,500,000,000.

In January of this year, Senator Jacob Javits told a trade meeting in Tokyo that Japan's refusal to compromise on trade problems — particularly textile exports to the U.S. — and open her markets to the United States threatens not only U.S. — Japanese relations but the trade structure of the entire world.

"I warn you that protectionists are out in force in my country," the New York Senator told a luncheon meeting of the Japan-America Society and the American Chamber of Commerce in Japan.

Two months later, one of America's top business leaders warned that Japan's delay in easing its present trade and economic restrictions could be the first step in an all-out global trade war.

Donald M. Kendall, Chairman of the Emergency Committee on American Trade (ECAT) and President of Pepsi Cola, Inc., expressed concern that it was already almost too late to act. "If we have a trade war we will be right back in the 1930's," he said.

Kendall told newsmen, at a breakfast meeting in Tokyo, that the pressure by the American textile industry for congressional restriction of synthetic and wool imports from Japan is matched by demands of the automobile, shoe and electronics industries.


A Flood of Imports

Why the mounting cry to do something about imports?

Basic statistics tell the story.

Imports into the United States have risen 90% since 1964. Six years ago, before the U.S. inflation rate began to worsen, the U.S. enjoyed a record $6,400,000,000 worth of exports over imports. Now the advantage has virtually disappeared.

Yet, to make up for foreign military and economic assistance, plus the Indochina War, the U.S. needs a hefty trade surplus.

The percentages of certain products that come to the U.S. from foreign sources is staggering. Here's a list of key items: steel, 13 percent; footwear, 33 percent; autos, 12 percent; woolen textiles, 26 percent; fish products, 50 percent; radios, 20 percent; television sets, 30 percent; bicycles, 28 percent; sweaters, 42 percent; home magnetic tapes, 88 percent.